The Secret to Picking Actively Managed Mutual Funds

If you are a regular reader of my blog, you know I recommend against buying anyactively managed mutual fund. Instead, I advise investing in a globally diversified portfolio of low-management-fee index funds, passively managed funds or exchange-traded funds (ETFs), in an asset allocation suitable for you.

Investors are looking at the data and getting the message. According to Morningstar, passive products captured 41 percent of estimated global net flows in 2012.

But the news is not all good. The same report indicated that 78 percent of worldwide assets under management for mutual funds and ETFs still reside in actively managed funds.